The Companies Accused of Buying Latin America’s Illegal Gold

The inside story of the companies accused of financing South America’s illegal gold trade.

A team of OjoPublico reporters toured illegal mining camps in Huepetuhe and La Pampa, the largest deforested area in Peru. We also sailed the rivers of Madre de Dios, Beni, and Madeira in search of Bolivian and Brazilian dredges. We eventually reached the mines in the mountains of the Cordillera del Condor, near the border between Peru and Ecuador, and traveled to the depths of Colombia’s jungles, a region dominated by the FARC and drug traffickers. These visits to the epicenters of the gold rush in these five countries allowed us to identify companies from the US, Switzerland, and the United Arab Emirates that financed the removal of tons of illegally obtained gold in South America.

The richest forest in southern Peru is crossed by a desert-like scar that looks like the planet that is about to split open. On one side is the Tambopata National Reserve in Madre de Dios state, one of the most biologically diverse areas in the world. On the other side is the last jungle within Peru’s borders, which should theoretically cushion against any threats from outsiders. Dividing these two areas is a patch of land with no trees, only fallen trunks; no rivers, just rocks, dirt and fetid lagoons. This is La Pampa, Peru’s largest illegal mining camp. This is the epicenter of one of the most devastating gold rushes in the history of the Amazon, and it’s just an hour away from the border with Bolivia and Brazil. And thousands of kilometers away are the corporations that have benefited the most from the devastation.

This is the first part of an investigation that originally appeared in OjoPublico and was translated, edited for clarity, and reprinted by InSight Crime with permission. See Spanish original here.

By traveling to mining centers in Peru, Bolivia, Ecuador and Colombia; accessing judicial and police documents on the illegal trafficking of metal; and analyzing the exportation of gold from South America, OjoPublico has identified the major financiers of the gold rush that has devastated large parts of South America in recent years — a group of companies from the US, Switzerland, Italy and the United Arab Emirates. They are all associated or linked to the London Bullion Market Association (LBMA), the organization that sets the international price of gold and brings together the world’s biggest gold traders.

Peruvian judicial authorities have targeted these companies (which also buy gold in Medellin, Colombia; La Paz, Bolivia; and Guayaquil, Ecuador) as a result of 25 criminal cases opened after authorities seized a ton of illicit metal in Callao state between 2013 and 2014. There are also other ongoing legal cases involving money laundering and illegal money that have prompted Peruvian judicial authorities to target these companies. Also under scrutiny are questions such as where the real capital of these corporations comes from; why they made transfers worth millions of dollars to buy gold from southern Peru’s mine-rich areas; and the nature of the contacts that company executives made with exporters in Lima and elsewhere in the Amazon, in order to move loads of gold to subsidiaries in Miami, Zurich, and Rome.

After publication of Ojo Publico’s investigation, Metalor issued an official response here. See MKS Finance’s official response here. See Kaloti’s response here.

An aerial view of an illegal gold mining camp in Peru, just outside a national park in Madre de Dios state. C/o Ojo Publico

OjoPublico’s investigation also traced the routes of illicit gold trafficking in South America, and examines the responsibility of companies linked to the London Bullion Market (some of them certified as delivering the highest quality product) in destroying landscapes across Latin America. This includes areas like Huepetuhe and La Pampa in Madre de Dios; the riverbeds of the Pando and Beni rivers in Bolivia, both of which connect to the Madeira river in Brazil’s jungles; the jungles of Caqueta in Eastern Colombia, and the jungles of Choco along Colombia’s Pacific, as well as the Nambija mountains on the Ecuador-Peru border.

Judicial documents pertaining to these multi-million-dollar operations reveal that these corporations negotiated the purchase of Amazonian gold with the so-called lords of illegal mining, as well as others who have been co-opted by organized crime; the owners of phantom export companies, and landowners who pretended to be businessmen. Also involved were money traffickers, currency exchange houses, controversial Russian and Chinese investors; Peruvian, Bolivian, and Brazilian contraband-runners; business leaders from tax havens in the Caribbean; and even some people under investigation by the US Drug Enforcement Administration (DEA).

Visits to the epicenters of the gold rush in these five countries allowed us to identify companies from the US, Switzerland, and the United Arab Emirates that financed the removal of tons of illegally obtained gold in South America.

Four of the six companies are members of the London Bullion Market. The other two companies, NTR Metals and Kaloti, are part of business groups (the refinery Ohio Precious Metals in the United States and Dubai Multicommodities Centre, located in the United Arab Emirates) that are included in the LBMA.

In recent years, all of these companies have centralized their operations in Lima. However, they also buy from a suspicious group of export companies in La Paz, which receives metal from the Andean highlands and the Bolivian Amazon region along the border with Brazil. These companies have also made purchases from export groups based in Medellin, which stockpile minerals sourced from Colombia’s tropical forests dominated by the FARC and in the border region between Ecuador and Peru.

As part of its investigation, Ojo Publico discovered that up until 2014, Metalor, Kaloti, and Italpreziosi rented space from Hermes, a company dedicated to transporting and safekeeping valuables, located an hour away from Lima’s airport. Of these three companies, only the Swiss refinery — which has appeared in judicial documents in relation to suspicious gold purchaes in Peru since the end of the 1990s — maintains its ties with Hermes. It is unknown whether MKS (owner of the PAMP refinery in Switzerland), NTR Metals (which vacated their space at Prosegur headquarters in Surco, a district in Lima, months ago), and Republic Metals Corporation have offices or representatives in Peru’s capital city.

The principal Peruvian officials behind the illegal gold seizures in 2013 and 2014, the country’s top money laundering prosecutor, Julia Principe, and the head of the country’s tax authority (SUNAT), Gustavo Romero, confirmed that the six companies listed in this report are part of investigations by prosecutors and police into Peruvian exporters involved in money laundering cases linked to illegal mining.

Engelhard Corp, Where It All Began

In the 1990s, US multinational the Engelhard Corporation — one of the biggest refineries in the world during the 20th century — was the principal purchaser of illegal metal in Peru. Nonetheless, the company’s operations came crashing down in 2000, when customs authorities prosecuted Engelhard’s subsidiary in Lima and their providers for fiscal fraud (for having set up a network of shell companies run by front men) and for sourcing contraband gold from Ecuador and Bolivia.

Following the fall of Engelhard, MKS and Metalor sent millions of dollars to Lima to buy minerals from a group of export companies located in regions that were a hotbed for gold mining. The main companies were Universal Metal Trading (UMT, included among the 500 largest companies in Latin America until 2012), AS Peru, E & M Company, Minera Tambopata, Sociedad Minera Rinconada, Minerales del Sur, Corporacion Minera Ananea and Titan Contratistas Generales. All of them, in addition to some smaller companies, are under investigation as part of the 25 criminal cases that were opened following the seizures in Callao, and are also under investigation for money laundering and tax fraud.

In 2012, Kaloti, NTR Metals, and Republic Metals Corporation (which run their operations in South America from Florida), as well as Italpreziosi, began to compete with Swiss firms to buy gold. Among their suppliers, a few stood out: the front companies of Pedro Pérez Miranda, alias “Peter Ferrari,” a business man investigated for money laundering; Darshan International group, linked to a tax haven in the Virgin Islands; and the Sanchez Paredes brothers, who own Comarsa and San Simon and have been accused of laundering drug money. These and other lesser-known companies stockpiled metal and kept it in the vaults of Hermes and Prosegur before sending it on commercial flights to Miami and Rome.

OjoPublico established that the Peruvian export companies cited above sent more than 180 tons of gold to companies in Switzerland, Italy, Dubai, and the United States between 2008 and 2014. This amount was larger than official gold production of Bolivia and Ecuador combined during that same time period. It is also much larger than more recent exports from Brazil and Colombia put together. During that time, sales for Universal Metal Trading – which had headquarters in the illegal mining areas of the Peruvian Amazon until 2013 – were surpassed only by the largest gold mining companies in South America: Yanacocha (in Cajamarca) and Barrick (in La Libertad and Ancash). The UMT gold (much of which was supplied by Leonardo Callalli, a man from Cusco who is now in prison for laundering profits from illegal mining) went directly to MKS Finance in Geneva.

Peru’s Ministry of Energy and Mines (MINEM) registered that Peru produced over 200 tons of metal in 2005; meanwhile, the SUNAT has revealed that between 20 and 25 percent of all the gold exports are illegally sourced. However, both of these figures pale in comparison with the findings of this report. In 2010, the MINEM collected statements from miners at the national level, who reported producing 180 tons of minerals; however, in reality, 330 tons had been exported from the country. If these 150 tons of contraband metal were taken into account, Peru would be the world’s second largest producer after China.

This is the first part of an investigation that originally appeared in OjoPublico and was translated, edited, and reprinted with permission. See Spanish original here.

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